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Long-run Impacts of Intergovernmental Transfers


  • Irineu de Carvalho Filho
  • Stephan Litschig


This paper provides regression discontinuity evidence on the long-run impacts of a temporary increase in federal transfers to local governments in Brazil. Revenues and expenditures of the communities benefiting from extra transfers increased by about 20 percent during the 4 year period from 1982 to the end of 1985. Previously established schooling and literacy gains of school-age cohorts as well as reduced poverty in the community overall as of 1991 are generally attenuated but persist in 2000. By 2010 the estimated education and income gains are still positive but typically cannot be distinguished from zero. Children and adolescents of the next generation—born after the extra funding had disappeared—show gains of about 0.06 to 0.10 standard deviation across the entire score distribution of two nationwide exams at the end of the 2000s. Available evidence on mechanisms points to a persistent reduction of the student-teacher ratio in local public primary schools throughout the 1990s and 2000s. We also find discontinuities in education levels and incomes of test takers’ parents that are consistent with intergenerational human capital spillovers.

Suggested Citation

  • Irineu de Carvalho Filho & Stephan Litschig, 2016. "Long-run Impacts of Intergovernmental Transfers," Working Papers 718, Barcelona Graduate School of Economics.
  • Handle: RePEc:bge:wpaper:718

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    References listed on IDEAS

    1. Pedro Carneiro & Costas Meghir & Matthias Parey, 2013. "Maternal Education, Home Environments, And The Development Of Children And Adolescents," Journal of the European Economic Association, European Economic Association, vol. 11, pages 123-160, January.
    2. David S. Lee & Thomas Lemieux, 2010. "Regression Discontinuity Designs in Economics," Journal of Economic Literature, American Economic Association, vol. 48(2), pages 281-355, June.
    3. Francesco Caselli & Guy Michaels, 2013. "Do Oil Windfalls Improve Living Standards? Evidence from Brazil," American Economic Journal: Applied Economics, American Economic Association, vol. 5(1), pages 208-238, January.
    4. Imbens, Guido W. & Lemieux, Thomas, 2008. "Regression discontinuity designs: A guide to practice," Journal of Econometrics, Elsevier, vol. 142(2), pages 615-635, February.
    5. Stephan Litschig & Kevin M. Morrison, 2013. "The Impact of Intergovernmental Transfers on Education Outcomes and Poverty Reduction," American Economic Journal: Applied Economics, American Economic Association, vol. 5(4), pages 206-240, October.
    6. Hahn, Jinyong & Todd, Petra & Van der Klaauw, Wilbert, 2001. "Identification and Estimation of Treatment Effects with a Regression-Discontinuity Design," Econometrica, Econometric Society, vol. 69(1), pages 201-209, January.
    7. Lee, David S., 2008. "Randomized experiments from non-random selection in U.S. House elections," Journal of Econometrics, Elsevier, vol. 142(2), pages 675-697, February.
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    More about this item


    Intergovernmental grants; human capital; test scores; regression discontinuity;

    JEL classification:

    • H40 - Public Economics - - Publicly Provided Goods - - - General
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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